Partial Concensus For Argentina's New Beef Price Agreement
AUSTRALIA - Following three months of negotiations, an agreement has been reached between the Argentinean government and representatives of the beef industry (including producers, feedlots and meatpackers) that eliminates price fixation in the Liniers market (the main live cattle market in Argentina).
18 May 2007
1 minute read
Instead, the agreement establishes fixed prices for beef carcases in the wholesale market, as well as suggested higher average prices in the Liniers market. In addition, the industry agreed to plans to maintain and enforce fixed retail prices for the 12 most popular cuts. These measures are designed to constrain domestic beef prices and consequently, the inflation rate.
In return, the government has committed to boosting cattle price transparency, allowing an annual minimum of 500,000 tonnes to be exported, easing export certificate issuance procedures, and funding up to A$85 million on a National Cattle Plan which aims to increase calf production.
Prices in the Liniers market were capped in November 2006. This reduced the number of cattle being traded, while increasing trade and prices in other unregulated markets, which are the main source of supply for butcheries (where 70% of retail beef is sold in Argentina). Following this recent agreement, supply and prices of cattle in the Liniers market increased.
It is doubtful whether the agreement will reduce retail beef prices as butcheries and supermarkets were not involved in the agreement. Prices for popular cuts have been capped since 2006, but retailers have exceeded maximum levels due to scarce supplies.
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